NEW YORK, March 3, 2009
Stocks Show Modest Losses Day After Tumble
Wall Street Wobbles After Sell-Off As Fed Chair Stresses Importance Of Financial Sector
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Play CBS Video Video Wall Street Freefall Monday's nearly 300-point dive for the Dow put the index at its lowest level since April 1997. As Jeff Glor reports, Wall Street is waiting for some good news.
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Video Americans Save, Dow Falls The personal savings rate has skyrocketed as Americans begin to put more money away. But, as Anthony Mason reports, less spending isn't good for Wall Street.
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Video AIG Receives Billions More The insurance giant AIG blew through $189,000 a minute last year despite their $150 billion bailout. If AIG is such a money drain, why did the fed hand out another $30 billion? Nancy Cordes reports.
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Traders work on the floor of the New York Stock Exchange, March 3, 2009. (AP Photo/Richard Drew)
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An investor looks at the stock price monitor at a private securities company on March 3, 2009 in Shanghai, China. (AP Photo/Eugene Hoshiko)
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Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
Stocks extended their losses in an erratic session Tuesday as investors wrestled with the reality that the economy is still far from a recovery. The pessimism that has dominated the markets for months stifled some tentative bargain hunting and in the process unraveled several attempts at a rally.
The selling pushed the Standard & Poor's 500 index to its first close below 700 since Oct. 28, 1996. But the losses were modest compared with Monday, when the Dow Jones industrial average tumbled 300 points and both the Dow and the S&P 500 index registered their lowest finishes in more than a decade.
Tuesday's fluctuations came as Federal Reserve Chairman Ben Bernanke told Congress an economic recovery depends on the government's ability to stabilize weak financial markets. He said the efforts were needed to avoid "a prolonged episode of economic stagnation."
Investors are still worried the government won't succeed. On Monday, the government injected $30 billion to troubled insurer American International Group Inc., its fourth attempt to stabilize the company since September.
Bernanke's remarks came as the central bank announced it would begin lending up to $200 billion in an initial move to spur consumer and small business borrowing for autos, education, credit cards and other expenses. The Fed first announced the plan late last year.
That offered some support to the market and helped curb selling, traders said.
"I think people are just finally happy to see that it's here and that it's going to begin," said Joe Saluzzi, co-head of equity trading at Themis Trading LLC. "Normally Wall Street will buy the rumor and sell on the news but I think this is kind of the opposite effect."
According to preliminary calculations, the Dow fell 37.27, or 0.6 percent, to 6,726.02. The index is now down more than 52 percent from its record of 14,164.53 set in October 2007.
Broader stock indicators also fell. The S&P 500 index slid 4.49, or 0.6 percent, to 696.33.
The Nasdaq composite index fell 1.84, or 0.1 percent, to 1,321.01.
The Russell 2000 index of smaller companies fell 6.79, or 1.9 percent, to 361.01.
Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to a moderate 1.9 billion shares.
Saluzzi said a rise prices of commodities like oil led to some speculation that global demand for raw materials could soon increase.
Light, sweet crude rose $1.50 to settle at $41.65 a barrel on the New York Mercantile Exchange. May copper futures rose 8.85 cents to $1.6045 a pound, the highest close since Feb. 9.
Investors showed little reaction to testimony from Treasury Secretary Timothy Geithner, who told the House Ways and Means Committee the added spending in the Obama administration's budget is necessary because the previous administration was unwilling to make long-term investments in health care, energy and education.
President Barack Obama on Tuesday likened the stock market to the daily tracking polls used during campaigns. He said tracking Wall Street's "fits and starts" too closely could lead to bad long-term policy.
Many investors remain fearful of buying into a market that has dashed investors' hopes that it had hit bottom. Last week, the Dow and the S&P 500 index fell through their November lows and, with their continuing pullback, are touching off fears that a new torrent of selling would take place.
Brian Reynolds, chief market strategist at New York-based WJB Capital Group, said the stock market's slide means it could be ripe for a bounce but that a lasting recovery won't come until credit market investors begin to put money into riskier debt that is now out of favor. Investors have been buying the safest types of debt, like government bonds, in favor of mortgage and credit card debt and some corporate debt.
"It's just another continuation of what we've seen for the last year and a half. If you compare the valuation in stocks to the valuation in credit, there is a huge disparity there," Reynolds said.
He contends the S&P 500 index, which is down 22.9 percent in 2009, will continue to fall until it hits the 600 level. That would be a loss of another 13.8 percent.
Investors are also beginning to look toward the Labor Department's February employment report, which is set for Friday. The monthly employment figures are one of the most important economic barometers because rising unemployment cuts into how much consumers spend. Consumer spending accounts for more than two-thirds of U.S. economic activity.
Government bonds were mixed Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.89 percent from 2.87 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.26 percent from 0.27 percent from Monday.
The dollar was mostly lower against other major currencies, while gold prices fell.
Overseas, Britain's FTSE 100 fell 3.14 percent, Germany's DAX index rose 0.52 percent, and France's CAC-40 fell 1.04 percent. Japan's Nikkei stock average slipped 0.69 percent.
© MMIX, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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See all 79 CommentsPosted by jgg00000008
Not at all. Those of us who are investors see a lot of opportunities in this down economy and many of us have a bright outlook for the future of our economy. History as shown that our economy is resilient and has experienced severe shocks and ups and downs as far back as our history is recorded. This does not mean that all of us have confidence in what our government does at any one point in time.
I find it very scary the way Obama and his minions go after private citizens who disagrees with them.
Posted by vistavermin1
This is something which concerns me as well. Jim Cramer is both an entertainer and a market adviser. He provides his perspective and analysis to his viewers. Like a journalist or a reporter, he should be able to present his views freely and without a hint of intimidation by the government or representitives of the government or politicians who don't like what he says. Although President Obama and his people might not like what they hear, it is important that they not interfere with what many of us consider freedom of speech and freedom of the press. When used this way, press includes other forms of media such as radio and television.
Do you have no concern about the yellowcake that Saddam Hussein had stockpiled? You don't think that was for WMD? What DO you think was the purpose of the 550 tons of concentrated natural uranium?
They were trying to prevent the invasion of Afghan. in 2001! (Remember???)
Anyway, do you think liberals would have approved a Bush shift from Iraq to Afghan? Never. But it's fine because it's Obama doing it.
Racist phony liberals.
Posted by jgg00000008 at 1:14 PM : Mar 3, 2009
Feed the fear!
Sorry, to burst your bubble, there is plenty to be made on the bottom.
Posted by rudedogrulz at 12:06 PM : Mar 3, 2009
The Republican doom and gloomers just keep creeping out of the dead wood. It's amusing, they and their policies brought this diaster after 25 years of smoke and mirrors. Now they think they can fix it.
Republicans new motto: "If we can't fix it up, we'll f**k it up--again."
OBAMA SEEKS THE LARGEST GOVERMENT EVER ( NO PRODUCT OR PROFIT )
THIS WILL MAKE IT WORSE.
RICH INVESTS ELSEWHERE 0UT OF OBAMAS REACH AND WE GO DOWN THE TOILET.
OBAMA IS A COMPLETE LIBERAL SUCCESS
U VOTED 4 THIS AMERICA
Posted by aheadace at 11:06 AM : Mar 3, 2009
You're lookin' like a genius now. Over that time period gold has only averaged about 4% growth (not counting the last 1 -2 years), but you haven't lost practically everything like most of us. I hope you have it in a safe place.
Posted by pythoncharly at 11:01 AM : Mar 3, 2009
Your clearly in denial. Even the mainstream media is trashing just about everything obama has done or plans to do. The stock market is tanking, yet you can't understand this is a bad thing, very bad thing.
That's exactly what your buddy Obama has done. That's only one thing he's doing to ruin the economy. Can't blame Bush for that.
Obama is Jimmy Carter 2 only worse.
_________________________________________________________________
And, you're basing your opinion off of what facts? The economy? Oh, you mean the ecomony he's been in charge of for less than three calendar months? Also, if I recall, the recession is believed to have started towards the end of /07, or definitely in '08. The man didn't even take office until 2009. Try all you might, but this is still Bush's recession, until you see some effect, good or bad, from Obama's policies. And they say Republicans have abrain. How silly...
Posted by tj217-2009 at 10:38 AM : Mar 3, 2009
Apparently you have processing problems. The market has been tanking since it became apparently Obama, the most liberal Senator, was goling to win the presidency. The market has dropped nearly 2000 points since Obama has taken office. We're clearly seeing incredibly bas impact on the economy as a result of Obama's Tax and Spend policies. The cat is out of the bag. This is Obama's economy now.
What are we shifting away from? A lot of things, but one of the biggies is an economic cycle that fueled the past decade. It went something like this:
We needed ultra-low interest rates after 9/11.
Those low rates fed insatiable demand for housing (real estate was especially attractive, because investors' fingers had just been burned by the dot-com bubble, so stocks were taboo).
Rising home values led to a surge in consumer spending -- funded by debt, of course.
Spending sprees led to massive trade deficits.
Massive trade deficits led to massive capital inflows by foreign investors.
Massive capital inflows kept interest rates low.
low interest rates? We're back to square one!
Repeat cycle until wealthy.
Now comes the cleanup. Notice this went on for over a decade, PRIOR to Obama.
The real reason the market is down? They got caught, the banks got caught. Now they have to actually have some rules and oversight. Guess what? They don't like it and they've lived so long with no or weak rules they can't figure the right way to get going again.
45 days won't fix several decades of lax rules, it's going to take some time, it's going to hurt.
Posted by scb1111_1 at 9:26 AM : Mar 3, 2009
The sky is falling! The sky is falling!
So--how much do you actually have invested in the stock market? How much investing have you ever done? Are you old enough to know what a bear market is?
The simplicity of your answers shows your depth of understanding, impress us some more please.
It will take until August of 2009 to May 2010 for many to see the bank capital problems to return to positive numbers in the first wave of the recovery.
Those, who can accelerate repayment of their debts, make their personal contribution towards the economic recovery of the country. In May 2009, the market will reverse towards a climbing trend. Until then, it will flounder and wash out the weakest investors and firms.
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